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Mr. Asit Bhatia
Vice Chairman of the Global
Corporate & Investment Banking Group at India
Bank of America
“Of the 22 countries that get into elections in 2024, India is amongst the important ones. While fiscal profligacy in the run up to elections is not unheard of, the current government is expected to continue its focus on some additional expenditure to fuel growth,” said Asit Bhatia, Vice Chairman of the Global Corporate & Investment Banking Group at India Bank of America, as he reflected on the economic outlook for 2024 amidst the evolving global economic landscape.
Bhatia anticipates a period of stability and growth, with India poised to deliver steady and sustainable growth despite the volatile global macroeconomic environment. “I see the next several years as a golden period for India,” he added, expressing confidence that India’s growth rate could exceed the anticipated 6.5-7% over the next couple of years.
Acknowledging the commendable job by the Government and the Reserve Bank of India (RBI) in managing inflationary pressures, Bhatia emphasised the potential for further growth. “Various factors underscore India’s resilience in the face of global economic challenges,” he noted, citing the Government’s infrastructure push, healthy corporate balance sheets, robust consumption narrative, and well-capitalised banks witnessing heightened credit growth.
Assessing the current business environment in India, Bhatia highlights robust macroeconomic fundamentals, including high growth, manageable fiscal deficits, controlled inflation, and improving current account deficits. “The Government’s reform-driven approach (GST, IBC, RERA, labor laws etc.) has improved ease of doing business in India,” he said. Bhatia cited the key factors that will influence investment decisions as political instability that will jeopardise policy continuity, external shocks from geopolitical issues and rate/policy paths of global central banks.
Anticipating the factors influencing investment decisions in 2024, Bhatia pointed to potential risks such as political instability and external shocks arising from geopolitical tensions. While he believes that no specific sectors of concern but underscores the attractiveness of India’s manufacturing and consumption narrative, the services sector catering to global demands, and the financial sector poised for substantial credit growth due to under-penetration.
Examining the role of government policies in shaping the business landscape in 2024, Bhatia emphasised their pivotal importance adding that taxation policies, capital controls, protectionism, and infrastructure development initiatives are significant determinants of economic growth. He anticipates a continued thrust on reforms from the government, conducive to attracting foreign investment and fostering domestic capex. “We see rapid infrastructure ramp up, de-carbonisation (500GW renewable capacity by FY30), step up in exports (on implementation of PLI schemes), opening up of government monopolies (privatisation), improving tax compliance (increasing tax filers), rising digitisation and financial inclusion to continue to provide scope for India’s corporate earnings to outpace its nominal GDP growth structurally.”
Amidst the optimism, however, he cautions against overlooking external factors such as geopolitical tensions and recessionary trends in developed nations, which could hinder India’s growth trajectory, “I do see the global geo-political situation, recessionary trends in some of the more developed countries, a global high-interest rate / inflationary environment, as some of the key factors that can hinder India’s growth, as we are now more than ever entwined with the global economy.”
Mr. Nilesh Shah
Past President, Bombay Chamber and MD & Group President, Kotak Mahindra AMC
India’s economic growth trajectory remains positive in 2024, supported by strong domestic demand and a pick-up in private and public investments. However, global headwinds like rising interest rates in developed economies and potential recession worries could temporarily slow export demand and manufacturing activity, believes Nilesh Shah, Past President, Bombay Chamber and MD & Group President, Kotak Mahindra AMC, as he shares his insight on how the country will perform in 2024.
India has strong economic fundamentals. These include domestic consumption, policy stability and reforms. These factors should help India outperform other countries. They should also help India sustain over 7% GDP growth. This is like expecting a batsman to score a century every time they bat.
The current business environment in India looks conducive for attracting investments in 2024, aided by policy stability, continuity and ongoing macroeconomic stabilisation. Sectors like banking and financial services, information technology services, and manufacturing look particularly attractive as credit growth picks up, digital transformation rises and Make in India gains traction. However, pockets of overvaluation and irrational exuberance in some stocks could pose risks for investors, like low floating stocks where valuations remain high.
The government’s continued reform push across sectors like infrastructure, manufacturing, financial services is expected to significantly improve India’s competitiveness and lift its growth potential. Ongoing focus on governance, policy stability, green transition and sustainable growth makes India an attractive investment destination compared to other emerging markets like China, Brazil and South Africa. Continuity on this front is crucial for fostering a favorable business environment.
Mr. Indranil Pan
Co-chair, Economic Policy Research & Development Committee,
Bombay Chamber & Chief Economist, Yes Bank
In conversation with the Bombay Chamber, Mr Indranil Pan, Chief Economist, Yes Bank, gives his insights into the economic outlook for India in 2024 and the factors influencing investment decisions in the current business climate.
What is your outlook on the Indian economy in 2024, considering global dynamics? What key factors do you think will drive or hinder growth?
How do you assess the current business environment in India and what factors do you anticipate influencing investment decisions in 2024? Any specific sectors of interest or concern?
How do you see government policies shaping the business landscape in 2024? Are there particular policy measures crucial for fostering a favorable environment for businesses?
Tejas Desai
Partner at Ernst & Young
India continues to shine as a bright spot in the global economy, poised for steady growth driven by a myriad of factors, believes Tejas Desai, Partner, Private Equity & Financial Services – Tax & Regulatory services at Ernst & Young LLP, as he weighs in on the economic prospects of India in 2024 against the backdrop of global dynamics. “India’s growth momentum is expected to continue steadily in 2024 and beyond,” says Desai, highlighting key drivers such as rapid advancements in physical and digital infrastructure, increased government capital expenditure, and a diversified manufacturing footprint following post-Covid geopolitical realignments. Desai points to the decade-low banking NPAs and corporate leverage, along with a reformed and digitised tax ecosystem, as pivotal contributors to India’s robust economic performance.
Desai has a positive outlook for the investment climate for the medium-to-long term, underpinned by India’s structurally robust domestic growth, healthy corporate profitability, and supportive pro-growth policies. According to him, the significance of India’s inclusion in JP Morgan’s Government Bond Index-Emerging Markets (GBI-EM), is a testament to India’s growing prominence in the global economy. However, Desai cautions against near-term risks such as a slowdown in global growth, geopolitical tensions, and inflationary pressures, both globally and domestically, which could impact investment decisions in 2024.
Reflecting on government policies, Desai emphasises the importance of further improving India’s ease of doing business ranking to attract more foreign direct investment (FDI). “Though India has attracted FDI to the tune of USD 596 billion from FY 15 to FY 23, there is potential for greater capitalisation of opportunities presented by China plus one policy of global MNCs,” he says. Desai underscores the need for continued focus on predictability and stability in foreign investment rules, including entry norms and KYC requirements, to foster a conducive business environment. Moreover, he emphasises the importance of a balanced regulatory approach that ensures ease of doing business while preventing misuse, alongside the appropriate interpretation and implementation of tax laws.
In the evolving narrative of global economic dynamics, the rise of cities as central hubs of finance, innovation, and cultural exchange marks a transformative era. Amidst this urban ascendance, the inauguration of the Istanbul Financial Center (IFC) in April 2023 heralds a significant milestone not only for Türkiye but for the global financial landscape at large. This comprehensive initiative underlines Istanbul’s strategic ambition to bridge East and West, leveraging its unique geographical and historical legacy to foster a new epoch of global economic integration. This unique positioning offers a strategic advantage, providing a 24-hour operational window that overlaps with both Asian and Western financial markets.
What is Istanbul Financial Center?
With an investment of approximately $3.3 billion, the IFC’s infrastructure is designed to accommodate a broad spectrum of financial services and institutions. It brings together public and private sector entities, including banks, asset management companies, and insurance firms, aiming to create an efficient financial services ecosystem. This includes Türkiye’s most prominent financial authorities and offers a comprehensive suite of facilities designed to meet the needs of a global financial hub.
With facilities like 1.3 million square meters of office space, a shopping mall, a congress center, and a smart city model, the IFC aspires to host up to 50,000 employees daily, providing a state-of-the-art work environment.
The overwhelming interest from both domestic and international banks and financial institutions in leasing space within the IFC highlights its appeal and the anticipated economic impact.
Strategic Vision Amidst Urban Ascendance
The vision behind the IFC is multifaceted, aiming to establish Istanbul as a key node in the network of global finance. This vision aligns with the broader trend of urban centers emerging as the epicenters of economic activity and innovation. In this context, Istanbul’s role transcends its national economic significance, positioning it as a strategic player on the international stage. President Recep Tayyip Erdoğan’s emphasis on the IFC creating a new financial ecosystem underscores the center’s potential to catalyze the flow of international capital, attract investment, and drive innovation in sectors such as Islamic finance, fintech and sustainable finance. This not only aligns with global financial shifts towards sustainability and digitalization but also positions Istanbul as a critical junction in the fabric of global economic relations, especially in facilitating trade corridors that span continents.
Istanbul and Global Trade Dynamics
The IFC’s strategic position is particularly pertinent in the context of emerging global trade corridors. Istanbul’s historical role as a crossroads of continents and cultures positions the IFC as a pivotal hub in these developments, facilitating the development of infrastructure, enhancing trade flows, and promoting economic cooperation across regions. This role of the IFC and Istanbul at large exemplifies the city’s evolving narrative from a historical bridge between East and West to a modern linchpin in the global economy
Navigating the Future: Challenges and Opportunities
The journey ahead for the IFC involves overcoming geopolitical challenges and fostering a competitive environment to attract global finance. The center’s strategic facilities and the high demand for space within it signal its potential to become a leading global financial hub. Illustrating how cities like Istanbul are not just adapting to global economic shifts but actively shaping them. As the IFC commences operations, it stands as a beacon of Istanbul’s ambition and potential, reinforcing the city’s role in the tapestry of global finance and trade.
Potential Collaborative Opportunities Between Istanbul and Mumbai
Mumbai holds a pivotal role as India’s financial heart, integral to South Asia’s largest economy and influential both nationally and globally. Home to the Bombay Stock Exchange—India’s largest—and headquarters for numerous major banks and financial institutions, Mumbai is a strategic node in the global financial network. This makes it an excellent partner for emerging financial centers like the Istanbul Finance Center (IFC) to explore collaboration opportunities.
Both Istanbul and Mumbai play significant roles as financial hubs in their respective regions, presenting potential for fruitful collaborations. Here are some possibilities:
Fintech Collaborations: Istanbul and Mumbai could develop joint projects to enhance their fintech ecosystems. This could involve mentoring fintech startups, organizing hackathons and innovation competitions, and sharing knowledge and experience in fintech regulations.
Education and Research Partnerships: Universities in Istanbul and Mumbai could establish exchange programs for students and faculty, undertake joint research projects, and organize conferences. Such programs would provide students with an international perspective on finance and business education.
Sustainable Finance and Green Investments: The cities could collaborate on green bonds and investments in sustainable projects. Both cities could promote green financing mechanisms and create joint funds for sustainable development goals.
Regulatory Collaborations and Best Practices Sharing: Istanbul and Mumbai could exchange experiences and knowledge on financial regulations and policies, enhancing regulatory alignment and transparency. This would facilitate the integration of both financial centers into the global financial system.
Cultural and Economic Forums: The cities could host regular forums and summits on financial and economic topics to strengthen their collaboration. These events would provide significant networking opportunities for business leaders and policymakers, increasing investment opportunities.
Investing in Infrastructure Projects: Mumbai is continuously improving its infrastructure, and investing in these projects presents significant opportunities for Turkish construction and engineering firms. Such projects can take place in key areas like transportation, energy, and housing within the city.
Such collaborations, which are mutually beneficial, could bolster the global financial prominence of both cities and contribute significantly to their regional development.
As cities continue to rise as epicenters of economic and financial activity, Istanbul and Mumbai, through initiatives like the IFC, are set to play a central role in shaping the future of the global economy.
Cüneyt Yavuzcan
Consul General of Türkiye in Mumbai
In conversation with the Bombay Chamber, Navneet Munot, MD & CEO of HDFC Asset Management Company, shares insights into the economic landscape of India for 2024 amidst global dynamics.
What is your outlook on the Indian economy in 2024, considering global dynamics? What key factors do you think will drive or hinder growth?
Over the past couple of years, India has been far more resilient compared to other economies. The macro-economic stability – growth, inflation, external sector, political – along with long term structural factors like favourable demography, financialisation of savings, shift in global supply chain, policy environment, rising services exports makes India primed for sustained growth in years to come. Risk to this outlook include any spikes in commodity prices due to geopolitical tensions, leading to inflation momentum reacceleration.
How do you assess the current business environment in India and what factors do you anticipate influencing investment decisions in 2024? Any specific sectors of interest or concern?
From a macro-economic standpoint, India is one of the few economies which looks well poised in the years to come owing to various structural tailwinds. With good growth potential ahead in India’s Amrtikaal, opportunities for alpha generation exist across the entire equity market spectrum, with bottom-up stock selection holding the key. In a way, India is truly a stock-pickers paradise due to the plethora of options it presents.
How do you see government policies shaping the business landscape in 2024? Are there particular policy measures crucial for fostering a favourable environment for businesses?
Potent combination of focus on manufacturing, infrastructure development (physical, social, digital), ease of doing business and simplification of regulation could pave the path for India to outshine peers in the next few years. More importantly, the emphasis on inclusive and sustainable growth could make India’s growth story unique compared to the likes of China and other Emerging Markets (EMs).
Quote for social media:
“With good growth potential ahead in India’s Amrtikaal, opportunities for alpha generation exist across the entire equity market spectrum, with bottom-up stock selection holding the key.”